How To Value Your Trade When You Still Owe

Trading in your vehicle is a great way to tip the odds when it comes to securing financing for your next vehicle. When you value your trade, that’s cold hard cash that can be applied to offset your new ride’s overall cost, but what about if you still have an outstanding balance on your previous loan? If this sounds like your situation, read on to find out how to go about trading in.

Positive or Negative Equity

Depending on how much you still owe on your previous loan, and how much your previous vehicle is currently worth, you will have either positive or negative equity.

To figure out which applies to you, simply subtract your vehicle’s current value from the remaining balance on your loan. If this value is positive, you have positive equity—you own a portion of your vehicle. If negative, you have negative equity—you owe more money on your car than it is currently worth.

Trading in with Positive Equity

When you have positive equity, that means you’ll have extra purchasing power when you go car shopping. The remaining equity you have can be applied to the price of your next vehicle, provided you can still finance the remaining balance.

Trading in with Negative Equity

If you have negative equity in your current vehicle, it will be a bit more challenging to secure your next ride. Buyers in this situation will have to pay off the negative equity in addition to paying the negotiated price of their new ride. If you find yourself in this situation, it is advisable to simply pay off the remaining balance of your loan before you upgrade.

Now that you know what your next steps are, be sure to gather the correct documentation for your trade-in. Should you have any lingering vehicle finance questions, don’t hesitate to reach out for answers today!